BlackRock exec forecasts “significant shift” towards private markets
BlackRock is expecting “a potentially significant shift” towards private markets in the coming years, as European investors allocate up to 20 per cent of their portfolio to these types of assets.
Fabio Osta, head of the alternatives specialists team in EMEA Wealth at BlackRock, said that a key theme for investors at industry conference IPEM Cannes this year was around how the industry can help broaden access to private markets, and further accelerate growth in the wealth segment.
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“We are already seeing strong demand from European investors, however we expect the current average allocation of three to five per cent to increase to around 10 per cent in the coming years,” he said. “In fact, the BlackRock Investment Institute suggests that for some investors, it could make sense to allocate up to 20 per cent of the entire portfolio to private markets, marking a potentially significant shift in portfolio allocation.”
Osta added that he sees “major investment opportunities accessible through private markets”, particularly in co-investments and secondaries in private equity, opportunistic credit, direct lending, and value-add private infrastructure.
His comments come after a senior executive at AllianceBernstein earlier this month urged investors to increase their allocations to the private credit market.
The asset management company’s global head of multi-asset business development, Aditya Monappa, noted that middle market direct lending represents a particularly good investment opportunity.
“With private credit, the supply equation has changed,” he said.
“We’ve seen this retrenchment of traditional credit providers. The net credit growth in the US, for instance, is really coming from non-bank sources.”
Preqin’s latest Alternatives in Europe report, released last September, found that 45 per cent of institutional investors plan to increase allocations to private debt over the next 12 months, alongside 51 per cent who plan to increase longer-term allocations.
Preqin said that these are higher proportions than for any other asset class.